Viktor Evtukhov, Russia’s State Secretary and Deputy Minister of Industry & Trade, explains why his country is well-positioned to expand the wood products trade with Asia.
PFA: Firstly, can you share current developments in Russia’s forestry and wood processing industry?
VE: Russia is a world leader in forest resources, volume-wise. We supply more than 200 million m3 of timber, and our timber industry is on the rise. Last year investments in Russia’s timber and wood processing industry increased by 16 per cent.
Our priorities now are to rely on centuries-old traditions of using wood, and implementing new modern technology. Today, there are 94 priority investment projects being carried out in forest development. Investment volume exceeds $5 Bn. We also plan on expanding the use of wood in the construction of public institutions—such as schools and hospitals.
Our strategy to develop the timber industry up till 2030 has ambitious goals. As the saying goes, you can make balloons or you can build blimps. It works the same way, but the scale and complexity differ dramatically. Similarly, the Russian timber industry is now entering a new phase. This is the result of a combination of state support, entrepreneur activity, and opportunities in globalisation.
PFA: In which direction do you foresee Russia’s wood trade going in the future?
VE: The key export markets that hold the most potential is China and Asia Pacific. Not only are these the fastest-growing markets, there is also long-standing historical bonds between our countries.
We plan to continue supplying traditional products such as pulp, sawn timber and veneer. We are also planning to expand supply of value-added wood products. Our potential partners and consumers (like China) will be interested in wood materials for modern construction. For example, the LVL beam; it is a homogeneous structure that provides high durability when under a horizontal load. As the beam’s length is not limited, it can be used in the construction of large stairwells.
PFA: You mentioned that the government is supporting public institution projects made of wood. What is the reason behind this and how is it progressing along now? Are there any challenges trying to achieve this?
VE: The main difficulties are connected with outdated construction regulations and fire safety requirements. However our Ministry developed a special order, which permits the construction of public buildings—such as schools and hospitals—in wood. Moreover, the state supports the construction of multi-storey apartment houses made from wood. Wooden housing is one of the most sustainable and low-cost construction methods. It can support economic development, and is well-aligned with our tradition and climate.
PFA: Bilateral relations between China and Russia are well-established in many areas. What are the goals of deepening wood trade ties with China?
VE: We are not just neighbours; we are bound by close cooperation, and extensive economic relations. For years now, China has been Russia’s reliable trading partner. Over the past year, timber production turnover has increased. For the first time, sawn timber export supply exceeded that of round timber. The supply of veneer sheets doubled, and we have also started to export wood chipboard.
The Russian-Chinese Program of Cooperation on forest resources development and usage has also been a great help for deepening ties. There are several large-scale projects being launched in Tomsk Oblast, Jewish Autonomous Oblast, Zabaikalsky krai and Irkutsk Oblast.
We are also executing joint projects, such as the construction of a cellulose plant in Khabarovsk krai. This project is developed together with RFP Group, Bank for Development and Foreign Economic Affairs (Vnesheconombank) and China Chentong Holdings Group. The amount of investment could reach $1.5 billion.
PFA: China is the second largest economy in the world. Some predict that very soon, it will overtake the USA as the largest. What trends do you see in this country, and how would you tap on the opportunities here?
VE: China’s economy is on the rise, and one of the reasons is domestic consumer demand growth. This is why the Chinese market is a priority for our timber industry. Geographic proximity is also an important factor. Economic relations between our countries are strong, and we actively support China’s “One Belt and One Road” initiative.
We are interested in attracting investment for developing production capacity in the Russian Far East, as well as upgrading forestry enterprises in that region. In turn, China is interested in quality products at competitive prices that come from a neighbour. This is why cellulose industry, furniture production, and wooden housing investments are beneficial for both countries. Such large-scale joint projects expand trade relations and create jobs in both countries.
PFA: What are your current and future plans to promote softwood, bearing in mind that Russian softwood is up against strong competition, such as New Zealand’s radiata pine?
VE: We are convinced that our wood and wood-based products are of the highest quality. Our wood is used around the globe and we have received positive feedback. Our consumers are happy, which is the best evaluation of our products and our work.
In promoting softwood we will focus more on larch. Siberian larch has unique properties, which allows it to compete successfully on the world market with other softwoods. There are several advantages of larch: great strength and durability. It is one of the best materials to use in load-bearing structures.
PFA: Apart from supplying wood, what other innovations or technologies can Russia offer?
VE: Russia can offer wooden materials with unique construction features that, in some areas, exceed traditional ones. We are hoping to target the Chinese market with products such as cross-laminated timber. Construction using this material is three times quicker, less noisy and dirty compared to building with concrete. Materials such as CLT and LVL are more common in the construction of multi-storey wooden houses around the world. We hope that the Chinese market will soon be able to evaluate the benefits of these new materials.
PFA: Do you think you will be able to encourage the local government to adopt wood as a structural element, especially as while China already imports wood from other countries, but hardly ever uses it in construction and architecture?
VE: Russia has two enormous advantages that allow us to be optimistic about our prospects—timber and production cost are very low compared to other countries.
As a result, the Asia Pacific region has shown huge interest in our products. The Russian timber industry’s participation at Sylva Wood this year has brought about excellent results. Russian manufacturers found more than 150 partners for various products such as LVL, OSB, plywood, finishing wall and floor materials, furniture components, and other value-added products.
On the whole, in terms of competition I can answer with the well-known saying: a Russian man harnesses the horse slowly but drives fast. We try to do things thoroughly, and think them through. But once the process starts, there’s no stopping us.
PFA: How will you be collaborating with the local Chinese/Asia Pacific industry? Are there plans for any projects in the works now?
VE: Of course, we are open to various forms of cooperation; from investing in China to attracting investment into Russian projects. We regularly organise special forums featuring entrepreneurs and banks from both countries. Some months back, there was one such seminar on the development and usage of forest resources at the Russian-Chinese Expo in Harbin.
Now we are working closely with several Chinese partners on discussing new projects for cooperation. We hope that in the near future these projects will become more concrete and come to fruition.
PFA: After China adopts the usage of wood in architecture, do you think other Asian countries will follow suit?
VE: Let’s take world trends into account. At the moment, one of the major world trends is the construction of sustainable and energy efficient houses. This is being promoted by governments around the world as well as requested by the people, who want a higher quality of life and comfort.
Wooden houses are the perfect answer to this demand. Compact cities with low-rise housing is growing. In Canada for example, low-rise housing accounts for about 70 per cent of the housing stock.
Furthermore, an advantage of wooden housing is its speed of construction. I am certain that Asia Pacific will soon take advantage of these modern building technologies to improve the population’s quality of life.
This article was first published in the Sept issue of Panels & Furniture Asia
